Tuesday, April 25, 2017

Responses to my Vancouver Sun op-ed on so-called Empty Home Tax

I have received many positive responses to my op-ed on what most reasonable people consider the unfair and somewhat incomprehensible aspects of Vancouver's Vacant Home Tax as it relates to those who keep a second home in Vancouver that is not vacant, investment property. Here are excerpts from just a few. (In some cases names and places have been changed to protect anonymity.)

I do hope the senior city officials and politicians who supported this tax will reconsider at least this aspect of the tax.

Let's start with this exchange between two friends on Facebook:

PB Well
written. The city has imposed nothing more than a new head tax. It's a
penalty and as you said, will do absolutely nothing to add more units
into the rental market.

DF It's
a dumb and likely ineffective tax for sure but the whole point is to
force more units on to the market. I know a lot of my friends in
Vancouver would be pretty happy penalizing those with occasionally used
second homes, unfair or not. So I'm not sure they would change their
mind given they can't afford to own even one property.

PBI
think most agree that in all probability very few (if any) homes/condos
will end up as rental properties. Laws (especially tax laws) should
never be based on jealousy. Do we not realize what type of slippery
slope this is.

Some other comments on the Vancouver Sun website and received by email.

VGI
work as a pilot and am away from home due to work more than 6 months of
the year. I can't rent out my place short term legally to cover the
days I am away, and if I did 30 month minimum I am unable to have a home
when I am off of work. Anyone who works as flight crew is in the exact
same position. Short term is the only thing that works for me and I am
happy to do it. This rule hasn't been thought through and the 90 day
limit the city of Vancouver is proposing to fill this isn't enough to
cover this loop hole in empty homes.

IE I
know people that own second homes in Coal Harbor ..Even if they could be rented, they would need to
be rented for a min $10,000+.. to cover monthly expenses, how many
people can afford those kinds of rent?

PBThank you to the author for raising this point. This
unfair tax will not increase the rental stock because as is pointed
out, many of these homes are not empty year round. How does it help a
local Vancouverite if some condo in Coal Harbour gets rented out for 30
days at a time, not necessarily consecutively?

This is just politicians trying to appear to be doing something, which ultimately won't work.
From MM:

Greetings! - it has been some time since I last touched
bases with you but we do follow you through various media channels
especially with your commentary on the Vacant Home Tax being implemented
by the City of Vancouver. We are caught in the web and dilemma. We own
a condo in FalseCreek and have done so for the last 12
years - a carryover from when my wife worked in Vancouver for a couple of years. Our condo is not really vacate - we use
it about every 6-8 weeks as well members of our family stay there on
occasion as have a grandchild in Vancouver. We now have received notice
of the need to declare our position with the condo. It is not our
primary residence and we do not rent out what we treasure as a very
special place that we worked hard to purchase and now maintain as a
contributing resident of the province. We find the
imposition of this tax quite repulsive and do not want to sell the
condo to avoid paying the tax - as one of our friends who lives in
Nelson has done.

Would you have any advice or
guidance on how we could best proceed to protect our asset in Vancouver
and not be subject to the taxation contemplated.

From DW

Hello Michael

I read your article in today's Sun and wanted to thank you for pointing out exactly the issues I have with the empty home tax.

I
am a retired lawyer, who has recently moved to Kelowna after living
my entire life in Vancouver. Although my wife and I now have our
principal residence in Kelowna, we keep a one bedroom condo in
Vancouver for frequent visits to the city to see family, friends,
colleagues and our doctors.

Earlier this month I
obtained a copy of the Vacancy Tax Bylaw. Upon review I noted that the
wording was flawed. The scheme provides for tax on "vacant" property.
Under section 2.3 " vacant" property includes property that "has been
unoccupied for more than 180 days". "Unoccupied" property is defined in
section 2.2. By definition it is either (a) a residential property that "is not the principal residence of an occupier", OR (b)
residential property that is "not occupied by a tenant or subtenant for
a term of at least 30 consecutive days". Subsections (a) and (b) are
disjunctive, meaning a property that is not a principal residence is by
definition "unoccupied" and subject to the tax whether it is rented out
or not.

My
sense is that this bylaw will fall flat. But even if I am wrong, I
believe I have options to avoid it. For those reasons I have concluded
that my interests are best served if I keep a low profile. Nevertheless,
I would be interested in any thoughts you might have on overturning the
bylaw.

From SR

Michael
These guys at City Hall have lost their marbles. If their intentions
were Honorable maybe some consideration could be given . But as in the
15% foreigners tax, the numbers do not add up. With the slow down in buying , the buyers tax revenues will be substantially lower this year and there will be a void to fill.

I am not sure what they are on to and how they will define the proposed emptyhome
and for that matter police it. Most of the properties that they are
attacking will be at the high end as you noted and renting them (if
possible) will do little to help the middle and low ends that need homes.
If an owner is concerned at the situation and decides to sell , who
sets the price (other than the market) and in what time is he required
to complete. Will he be fined for an empty house while on the market?

A lot of people are like me. They have lived some 25-40 years in the same property
, have paid off any mortgages they may have had and look to retirement
with possible a second residence in the sun (this year badly needed).
Some years they may not be 180 days in their homes
but spend time at least time monthly to keep in contact with city,
bills and friends. Makes it difficult to rent if you or some of your
family are spending time almost every month in this residence.

By the way what is the definition of a principal residence by city standards?

How is the City going to police ?. Turn neighbours onto neighbours ,
hire a special policing staff at additional cost ?Might end up like
commuters in San Fran who opted to take the high speed lane by using
blow up mannequins. Maybe people will leave lights on with a couple of
these types sitting by the window.

The solution to housing affordability in Vancouver is to speed up the permit stages and encourage
rental through bonusing. Also, we should not just focus on
Vancouver. We should have a more defined regional plan for development
tied to transit.

Why should people who have been good citizens and who have based their
retirement strategies on a reasonable amount of travel etc be penalized.
If taxes are low as discussed ,maybe that is
the answer along with focus on new construction . If not, people away
from their Vancouver residence over 180 days will probably stay more at home
,thus taking supposed product away from the city inventory.

What will
have been achieved except adding insult to such people and you can guess
who they will vote for. This is all about politics and therefore it's time for a change at City Hall. That's my RANT for the moment. Best regards Sid.

1 comment:

Anonymous
said...

The Empty Homes Tax is less of a head tax and more of a Vision Vancouver cash grab. If it was really about increasing rental supply it would have focussed on speculative real estate purchases made over the past 5 years - and particularly in the condominium apartment market.

I don't like to see more and more perfectly good homes demolished and replaced by maxed-out luxury homes that sit empty. The issue there is much more about loss of community than housing supply. The foreign buyers' tax was a good Provincial initiative... Maybe that tax needs to be increased? David Ley has proven the impact of foreign investment in this market.

Back to the Empty Homes Tax... It does not distinguish speculative condo purchases (for the purposes of parking money or flipping real estate) from long-time family-owned homes that may sit empty while decisions are made about seniors' housing needs or whether the property will be retained by the family. Those homes tend to still be well-maintained, and there is a strong connection to community. Forcing those families to sell or undertake expensive upgrades to become "landlords" is absolutely idiotic.

If the City was really interested in providing more rental housing, why doesn't it make its entire (large) real estate portfolio available for housing development - on a long-term lease basis?

And, with respect to those empty new luxury homes... If those owners decide to rent them out - they won't be occupied by struggling students, single-parent families, the working poor, or others with limited means. The City is only making sure that there is a luxury rental housing supply - with units going on the market for several thousands of dollars per month. Who ever thought this was a crying need in the community?